Bitcoin trading surges as Japanese retail investors dive in

By Chris Dannen

Feb 24, 2017

The surge in BTC/JPY trading is part of a larger trend in mom-and-pop forex trading in Japan.

Trillions: The Wall Street Journal today notes that Japanese day traders are rushing into USD/JPY forex trading since Donald Trump was elected in November last year. Market-watchers there were puzzled to see foreign-exchange margin trading — individuals buying and selling USD with a small down-payment in Japanese yen—rise by 82 percent from Q4 2015 to Q4 2016.

These mom-and-pop investors are attracted by “volatility sparked by pronouncements of the new US administration,” says the Journal. Comments by President Trump accusing Japan and China of currency devaluation sent the price of the dollar to a two-month high of 112¥.

Increased interest in forex trading may be a result of a lack of investment opportunities in the broader, still-stagnant Japanese economy:

Currency trading by Japanese individual investors has surged in recent years as ultralow interest rates and a sluggish stock market curb returns elsewhere. Mom-and-pop investors account for almost 30 percent of foreign exchange volume in Tokyo…

It’s not just USD, but also bitcoin they’re trading en masse. Lately, the price of bitcoin has screamed to new $1200 highs, driven by volume from Japanese traders — a fact mostly overlooked owing to the excitement over the Winklevoss Bitcoin ETF in the US.

The Japanese bitcoin exchange market represents 51.5 percent of the global bitcoin exchange market. Its top exchange does $123.5 million USD daily trading volume. In April, sale of bitcoin will cease to be taxed, and cryptocurrency will assume classification alongside other currencies as a fully regulated and legal payment method for Japanese citizens.

The head of business development from Japan’s largest cryptocurrency exchange was quoted by CoinTelegraph at the end of January saying:

Japanese national TV shows and newspapers such as NHK and NIKKEI featured about cryptocurrency expanding awareness of the general public… Many still think of Bitcoin as an investment vehicle. However, the situation is changing where Bitcoin is also starting to be used as a payment method in the past few years… Regarding payment volume, compared to last year January, the monthly volume increased by 8900%.

This is why the decision on the Winklevoss COIN ETF isn’t make-or-break for Bitcoin; because the dominant municipal economy on Earth (Tokyo) has already embraced it, along with other major economies like South Korea, China, and Singapore. It’s up to the US to keep up.